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Service Degradation Due To Financial Crunch: Warned By Telecom Sector

For the telecom industry to survive, average revenue per user (ARPU) must remain above $1.5 in dollar terms since spectrum fees, fuel, and electricity are dollarized.

Due to the non-opening of Letters of Credit (LCs) expected load shedding, and a flawed policy pegging license fees to the US dollar, operators warned the government further degradation would occur in the coming days.

President and Group CEO PTCL & Ufone Hatem Bamatraf, Jazz CEO Aamir Ibrahim, Telenor CEO Irfan Wahab Khan, and a representative from Zong visited the Federal Minister for Information Technology and Telecommunications Syed Amin Ul Haque. In the meeting, the IT & Telecom sector and industry concerns were discussed.

Moreover, industry players talked about the regulator’s pricing restrictions that prevented operators from increasing prices. According to them, the current ARPU of 80 cents is the lowest in the world and it must remain above $1.5 for the industry to survive.

CEOs informed the minister of the uncertainty caused by the fluctuating exchange rate, rising interest rates and fuel and electricity tariffs that prevent them from making a business plan.

Since telecom license fees and interest on installments are pegged to the US dollar the devaluation of the local currency has hampered the business case for telecom companies. Any sound financial plan cannot be made due to the continuous devaluation of the local currency.

There were also concerns raised during the meeting regarding the delay in finalizing the infrastructure-sharing policy which could reduce their expenses greatly. Further due to restrictions on opening LCs telecom operators cannot upgrade their capacity.

As summer approaches, load shedding is expected to worsen, said one of the officials adding that telecom networks are running on backup power and services will continue to deteriorate.

Outages are increasing in different parts of the country so keeping the network up and running is becoming more challenging. Backup power and fuel are limited and are not available for routine prolonged outages.

Asked about the 5G launch in the country industry sources said that due to the current economic situation, it is impossible to launch the service this year.

It was informed to the CEOs that the government is aware of the telecom sector’s challenges. According to him the ministry would provide Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar with a comprehensive view of the situation and would urge immediate action.

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